The Corporate Observer : Washington D.C. Class Action Lawyer & Attorney : Steven Berk Law Firm : Consumer Protection, Corporate Abuse : The Corporate Observer Blog

The American economy will be strengthened by the new whistleblower provision in the Dodd-Frank financial reform bill. Reporting securities violations and other corporate misconduct will both strengthen the world’s confidence in American companies and limit fraudulent schemes before they metastasize. Whistleblowers – ranging from high-powered executives to entry level employees to average citizens can be among our most useful tools in combating fraud. For this reason, The Corporate Observer applauds the Dodd-Frank bill.

Under the new bill, whistleblowers will be eligible to receive:

(1)                           10% to 30% of any monetary penalty in excess of $1 million imposed as a direct result of their assistance, cooperation, and knowledge; and

(2)                           Statutory protection from employment discrimination.

Who are whistleblowers?

Conscientious and ethical citizens who become aware of corporate misconduct; and have the courage to stick their necks out to report that conduct to the appropriate governmental authority. A Whistleblower is not a snitch or a tattle tale. Rather they are vigilant citizens who speak up to protect others from becoming victims of corporate misconduct and securities fraud.

What is a whistleblower claim?

A whistleblower claim is a formal notice to the government, in this case the SEC, of wrongdoing. For example, if you become aware of illegal conduct such as:

(1)   Maintaining improper accounting practices;

(2)   Systematically misappropriating investor monies; or

(3)   Violating any other securities law;

you should consider submitting a whistleblower claim. Claims will be reviewed by the SEC and delegated to the appropriate regulatory department. From this point, the SEC will investigate the validity of the claim, the value in pursuing the accused party, and the proper penalty to assess.

To be clear, the Dodd-Frank Financial Reform bill allows whistleblowers to report any violation of securities laws to the SEC. Specific rules will be issued by the SEC in approximately 250 days.

Why file a whistleblower claim?

Individuals across America and across the globe invest in American businesses based on their reliability and integrity. Specifically, foreign governments purchase U.S. treasury bonds because they believe in the soundness of the American system. Violators of securities laws threaten the credibility and reliability of the American economy.

Those who invest in securities deserve your vigilance. Most securities are not held by wealthy individuals, but rather by average American investors who have 401K retirement accounts, college savings funds, and pension assets in stocks of public companies. Millions of American investors – thousands of people’s futures – depend on the credibility of the securities market for financial planning.

Acting as a whistleblower for securities fraud violations is every citizen’s opportunity to right corporate wrongs and protect consumers by limiting fraud.

How?

The Dodd-Frank Financial Reform Bill allows the SEC up to 270 days from July 21, 2010 to formulate rules and regulations for submitting a whistleblower claim to the SEC. Until these rules are finalized, the SEC has requested that complaints be submitted through its online forum (http://www.sec.gov/complaint.shtml) or by mail to the SEC’s complaint center at

SEC Complaint Center.

100 F Street NE

Washington, DC

20549-0213

Check back here for updates to the SEC’s claim submission guidelines and policies.

Legal Representation

Whistleblowers submitting claims anonymously are required to retain legal representation before submitting a claim. All other whistleblowers have the option to retain an attorney, but are not required to do so. At Berk Law we are experienced in whistleblower actions. Steven Berk has served in the General Counsel’s Office of the SEC and as an Assistant United States Attorney. If you’re interested in filing, or have any questions about a whistleblower claim please contact us at info@berklawdc.com   or visit our website, www.berklawdc.com for more information.

Assisted by Zach Kady

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WAMU’s complicity in the scheme resulted in the defrauding of millions of dollars from thousands of investors.

Berk Law, the Law Offices of Keith L. Miller, in tandem with Cotchett Pitre & McCarthy filed an action in the United States District Court for the Northern District of California on behalf of victims of a $150 million Ponzi scheme involving thousands of defrauded investors and the promise of safe, high yield CDs. The scheme, centered in Napa, California, was the brainchild of William Wise, who has a long a record of securities violations. The defendant in the case is Washington Mutual Bank, which Wise used to facilitate the operation of his scheme[1].

Specifically, Wise used two branches of WAMU located in Napa California to deposit, transfer and wire throughout the world the money earned from his illicit activities. Eventually, as Wise’s account grew, WAMU’s branch manager in Napa suggested he obtain a remote deposit facility (often referred to as a reverse ATM). Before that device was provided, WAMU was required to audit Wise. WAMU also suggested Wise obtain software offered to the bank’s larger clients to direct and manage a high volume of wire transfers. This tool again required a WAMU audit. This second audit was run from WAMU’s treasury department in Seattle, Washington. By providing these special services, WAMU knowingly provided Wise with his own private “bank within a bank”.

As the complaint alleges, WAMU learned of Wise’s illicit scheme thorough two audits by two different managing departments, but nevertheless allowed Wise’s activities to remain unchecked. WAMU’s complicity in the scheme resulted in the defrauding of millions of dollars from thousands of investors.

During this time period, WAMU had been operating under a Consent Decree issued by the US Office of Thrift Supervision in 2007. The decree was in direct response to WAMU’s previous failures to comply with numerous federal anti-money laundering statutes including the International Money Laundering Abatement and financial Anti-Terrorism Act of 2001, the Money Laundering Control Act of 1986, and the Bank Secrecy Act of 1970. The Consent Decree, among other things, ordered strict compliance with bank secrecy and money laundering requirements, and called for new and improved policies for maintaining compliance with federal banks secrecy and money laundering laws.

Steven N. Berk, Counsel for the plaintiffs remarked, “WAMU’s history of putting profits above compliance to capitalize on the mortgage bubble is well documented, but only now are we seeing that same corporate culture spilling over into taking risks in other areas such as the support of illegal and shady investment schemes.”

Assisted by Zach Kady

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